Even if your broker will help you to see clearly, it is always better to know the mortgage traps. Here’s how to avoid them.
Think well about your down payment
If your savings allow, it can be advantageous to deposit 20% of the price with the purchase of the house. A high down payment will save you the mortgage insurance premium even if the interest rate is sometimes higher. In addition, qualification for a file is easier to obtain with at least 20% down payment.
Make sure the funds you use are available at the time of purchase. In some cases, administrative delays could make you miss a good opportunity.
The Home Buyers’ Plan that allows you to withdraw up to $ 25,000 from your RRSPs can make a big contribution to the down payment. For more information, visit the federal government website .
Make your budget
We can not say it enough, any big financial decision must pass the test of a realistic budget.
In the short term, we must think about the inspection, the transfer fees, the CMHC premium tax (for down payment of less than 20%), the notary fees, the tax adjustment fees, move, to furnishings. Then come school and municipal taxes, condo fees and more.
In the long term, will you be able to assume a few percentage points increase in your renewal rate? Or face unforeseen events? Difficult to predict the future, and that’s why you need to have enough leeway to continue saving and maintaining a cushion after purchase.
As we explained in the article “How to determine your borrowing capacity? ” It is not recommended to use the maximum of its capacity. Also, our calculator helps you determine your borrowing capacity.
Obtain your file and credit score in advance
Even if you believe you have an impeccable payment history, be sure to get your Equifax and TransUnion credit records. This will avoid you unpleasant surprises after filing your mortgage application.
Since credit reporting agencies manage the information of millions of consumers provided by a multitude of companies, this type of error or omission can happen:
- An old paid account is entered as having a balance
- Margins / open credit cards that you no longer use
- An error in your information creates a duplicate record
- Account not owned by you (fraud)
- Any information not updated
- Your credit score will also influence the terms of your mortgage contract. Remember that a score of 720 and above is desirable. Read our article to learn more about the myths surrounding the credit report .
If you ever find that your score is not as high as you thought, check out our tips for improving your credit score . Your mortgage broker can also help you find solutions.
Do not choose your mortgage strictly according to the rate
It is as important to shop for your mortgage as your home. If the less percentage points save you monthly, they could cost you a lot if they force you to unfavorable conditions in the long run. Before choosing, make sure all terms are right for you: term, penalty, prepayment, portability, etc.
It is precisely for this reason that a broker Mutli-Loans will be your best ally. By doing business with several lending institutions, he can find funding on terms that meet your needs and your situation.